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AN ACT Relating to local option excise tax on the sale of law schools; adding a new chapter to Title 82 RCW; prescribing penalties; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Sale" has its ordinary meaning and includes any conveyance, grant, assignment, quitclaim, or transfer of the ownership of or title, including any contract for such conveyance, grant, assignment, quitclaim, or transfer, and any lease with an option to purchase under which possession is given to the purchaser, or any other person at the purchaser's direction, and title is retained by the vendor as security for the payment of the purchase price.

(2) "Selling price" means the true and fair value of the assets conveyed, including goodwill and other intangible assets. If the transfer is an arm's-length transaction between unrelated persons for a valuable consideration, a rebuttable presumption exists that the selling price is equal to the total consideration paid or contracted to be paid to the transferor, or to another for the transferor's benefit. As used in this section, "total consideration paid or contracted to be paid" includes money or anything of value, paid or delivered or contracted to be paid or delivered in return for the sale, and shall include the amount of any lien, mortgage, contract indebtedness, or other incumbrance, either given to secure the purchase price, or any part thereof, or remaining unpaid at the time of sale. Total consideration shall not include the amount of any outstanding lien or incumbrance in favor of the United States, the state, or a municipal corporation for taxes, special benefits, or improvements. If the total consideration for the sale cannot reasonably be determined, the department of revenue shall determine the true and fair value by appraisal.

(3) "Sale of a law school" means a sale of all or substantially all of the materials, supplies, inventory, and goodwill of a law school, including but not limited to a law library, cabinets, furniture, office equipment, motor vehicles, and other tangible property, and reports, documents, surveys, books, records, files, papers, and other written or electronically stored material in the possession of the school, and operating fees, service and activities fees, other fees, and rights to such fees, and materials and rights associated with in-service training programs, faculty development programs, conferences developed or presented by the school, curriculum, and publication projects, and funds, credits, and assets, and employee contracts, other contracts, and vendors agreements.

NEW SECTION. Sec. 2. (1) The governing body of a city or county may impose an excise tax upon each sale of a law school at a rate of . . . . percent of the selling price. A county ordinance adopted under this section shall contain a provision allowing a credit against the county tax imposed under this section for the full amount of a city tax imposed under this section upon the same taxable event.

(2) The governing body of a city or county shall contract the administration and collection of this tax to the state department of revenue, which shall deduct a percentage amount, as provided by contract, not to exceed two percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of tax under this chapter that is collected by the department of revenue shall be distributed to the counties and cities monthly.

NEW SECTION. Sec. 3. A tax imposed under this chapter and interest or penalties on the tax shall be a specific lien upon each piece of property included in the sale from the time of sale until the tax shall have been paid, which lien may be enforced under Article 9 of Title 62A RCW. A tax imposed under this chapter is the obligation of the seller and the department of revenue may, at the department's option, enforce the obligation through an action of debt against the seller or under Article 9 of Title 62A RCW, and resort to one course of enforcement shall not be an election not to pursue the other.

Each sale of a law school shall be reported to the department of revenue within five days from the date of the sale, or five days from the effective date of this section, whichever is later, on such returns or forms and according to such procedures as the department may prescribe. Such forms or returns shall be signed by both the transferor and the transferee and shall be accompanied by payment of the tax due. A person who intentionally makes a false statement on a return or form required to be filed with the department under this chapter is guilty of perjury.

NEW SECTION. Sec. 4. (1) The tax imposed under this chapter is due and payable immediately at the time of sale, and if not paid within thirty days after the time of sale shall bear interest at the rate of one percent per month from the time of sale until the date of payment.

(2) In addition to the interest described in subsection (1) of this section, if the payment of a tax is not received by the department of revenue within thirty days of the date due, there shall be assessed a penalty of five percent of the amount of the tax; if the tax is not received within sixty days of the date due, there shall be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within ninety days of the date due, there shall be assessed a total penalty of twenty percent of the amount of the tax.

(3) If the tax imposed under this chapter is not received by the due date, the transferee shall be personally liable for the tax, along with interest as provided in subsection (1) of this section, unless either the transferor or transferee notifies the department of revenue in writing of the occurrence of the sale within thirty days following the date of the sale.

(4) If upon examination of affidavits or from other information obtained by the department or its agents it appears that all or a portion of the tax is unpaid, the department shall assess against the taxpayer the additional amount found to be due plus interest and penalties as provided in subsections (1) and (2) of this section. If the department finds that all or a part of the deficiency resulted from an intent to evade the tax payable under this chapter, an additional penalty of fifty percent of the additional tax found to be due shall be added.

(5) No assessment or refund may be made by the department more than four years after the date of sale except upon a showing of:

(a) Fraud or misrepresentation of a material fact by the taxpayer;

(b) A failure of the transferor or transferee to report the sale under RCW 82.45.090(2).

NEW SECTION. Sec. 5. All of chapter 82.32 RCW, except RCW 82.32.030, 82.32.050, 82.32.140, and 82.32.270 and except for the penalties and the limitations thereon imposed by RCW 82.32.090, applies to the tax imposed by this chapter, in addition to any other provisions of law for the payment and enforcement of the tax imposed by this chapter. The department of revenue shall by rule provide for the effective administration of this chapter.

NEW SECTION. Sec. 6. This act applies to all taxable events under this chapter not final as of the effective date of this act.

NEW SECTION. Sec. 7. Sections 1 through 6 of this act shall constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 8. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.